The Digital Face of India’s Economy
Most of us have the feeling that online banking, e-retail and mobile entertainment are the “new normal” means of living in a fast-paced digital society. But just how quick India’s transition has been is revealed by a recent Finance Ministry answer to a Lok Sabha question.
Digital payments almost doubled between FY2019 and FY2021, reaching nearly Rs 4,400 crore. Average daily tasks like grocery shopping and playing legal online lottery in India make up the majority of the total turnover as millions of desi consumers have gotten used to mobile payments. Covid-related lockdowns certainly accelerated the growth of online retail and entertainment but digital payments had already gained their foothold even before, Centre-provided data shows.
The RBI has already given commercial banks the freedom to adjust their service charges, transferring some of the transition costs to average users. These charges, however, have been kept through guidance by the monetary regulator and competition from past-paced fintech solutions for mobile phones.
The Revenue Department had already instructed banks not to apply charges on “prescribed” electronic modes that are issued and supported by the NCPI, such as RuPay cards and BHIM-UPI payments.
Online Entertainment and Gaming as Drivers of Digital Growth
These new consumption patterns are especially visible in leisure online services – arts, entertainment and gaming above all. Industry studies on the size and demographics of online lotteries reveal how a traditional gaming segment is moving away from paper-based tickets.
Prior to GST introduction in 2017, the lottery market was estimated at around Rs 50,000 crore per year (USD 6.7 billion). Like most entertainment and gaming sectors, State lotteries also had to accept the new indirect tax. As a result, small-time retailers suffered a drop in ticket sales and were particularly challenged by black market competition.
While illegal lotteries are estimated to account for almost half of the market, there is growing awareness and demand for legal online outlets for gaming and entertainment. Online distribution has also proven more efficient and user friendly. At the rate of technological adoption and widespread internet access, online lotteries, bingo and other real-money gaming choices are expected to evolve and grow further.
The definitive digital transition of the Union economy is likely to continue creating added value and market opportunities. Better monitoring and control, better safety and stable payments are expected to create more job opportunities and elevated standards for consumer protection and privacy.
These trends are visible first in sectors like arts, media, entertainment and gaming simply because this kind of contents are distributed more easily via virtual channels – to more people and with lower costs. Beyond the inevitable online retail, the future of India’s tech industry looks closely tied to leisure industries given their current size and potential.
